India’s Steel Industry Hit by Influx of Cheap Imports, Mills Cut Output

India’s steel sector is facing growing pressure as a surge in low-cost imports threatens domestic production and expansion targets. Many smaller mills have either halted operations or reduced output, raising concerns over the country’s long-term capacity growth and investment outlook.

Surge in Cheap Imports Impacts Local Mills

A sharp rise in cheaper steel imports, primarily from China, has disrupted India’s domestic steel market. Local steel prices have fallen close to 5-year lows, making it difficult for smaller and medium-sized producers to maintain profitability. Around 150 mills have suspended operations, while nearly 50 more have scaled back production due to sustained pricing pressure.

Small and medium enterprises account for nearly half of India’s total steel production, highlighting the widespread impact of this downturn. The reduced operating activity is also likely to affect employment and raw material demand across associated industries.

Pricing Pressure and Margin Strain

The influx of lower-priced imports has not only hurt smaller mills but has also squeezed profit margins for larger producers. The continuous fall in domestic prices has limited the sector’s ability to invest in future capacity expansion. Industry observers note that low prices are particularly concerning when India plans to add 100 million tonnes of capacity in the coming years, requiring substantial investment.

At present, the financial strain is evident across the supply chain, as companies struggle to balance operating costs with market competitiveness.

Safeguard Duty and Government Measures

To counter the influx, India has imposed a 12% temporary safeguard duty on a wide range of steel products. The measure was introduced to protect domestic manufacturers from low-priced imports, mainly from China, which is facing a supply surplus in its home market.

However, the safeguard duty is set to expire this week, and no decision has been announced yet regarding its renewal. The country’s trade authority has recommended extending the duty for another 3 years to help stabilise the sector. Additionally, stricter quality checks are being implemented to prevent the import of substandard materials.

Read More:India's Trade Deficit Widens to $32.15 Billion in September

Outlook for India’s Steel Industry

Despite robust domestic demand driven by infrastructure growth, the Indian steel industry remains vulnerable to global price fluctuations and import competition. The ongoing situation underscores the need for balanced trade measures that support fair competition while sustaining local production.

While uncertainty persists over policy decisions, the coming months will be crucial for India’s steel producers as they navigate pricing pressure, import challenges, and future investment plans.

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